Exhibit 10.3
THIS AGREEMENT is made on 1 March, 1996 BETWEEN:
(1) TEMPLETON RUSSIAN AND EASTERN EUROPEAN DEBT FUND having its
Registered Office at 13 Rue Goethe, L-1637 Luxembourg, Grand-
Duchy of Luxembourg (hereinafter called "the Company") of
the first part,
and
(2) TEMPLETON INVESTMENT MANAGEMENT LIMITED, incorporated under
the Companies Acts and having its Registered Office at
Plumtree Court, London EC4A 4HT (hereinafter called "TIML")
of the second part.
WHEREAS:
(A) The Company wishes to appoint TIML as investment manager of
the Company on the terms and conditions hereinafter set
forth.
(B) TIML is a member of IMRO and as such regulated by IMRO in
the conduct of investment business.
NOW THEREFORE THE PARTIES HEREBY AGREE as follows:-
1. APPOINTMENT
1.01 The Company hereby appoints TIML as investment manager of
the Company and its subsidiaries and TIML agrees to such
appointment ("appointment"). In this capacity TIML shall
manage the assets of the Company and its subsidiaries ("the
Assets").
1.02 TIML agrees to act as investment manager on the terms of
this Agreement.
1.03 This Agreement shall commence on 12 March, 1996 (the
"Commencement Date") notwithstanding the date of this
Agreement and shall take immediate effect with respect to
the Assets the initial value of which shall be equal to the
net proceeds of the placing of up to 20,000,000 shares in
the Company pursuant to a prospectus to be issued by the
Company and dated 1 March 1996 ("the Prospectus").
2. AUTHORITY OF TIML
2.01 During the continuance of TIML's appointment hereunder, TIML
shall have full authority without prior reference to the
Company to manage, invest, realise and reinvest the Assets
in accordance with the Investment Objective and Policies,
Investment Restrictions and Dividend Policy as set out in
the Prospectus and subject to any restrictions set out in
the Prospectus or in the Articles of Incorporation of the
Company or imposed by Luxembourg law and further subject to
any amendment or variation made in accordance with Clause
2.02.
2.02 (a) Subject to Clause 2.01, TIML shall have complete
discretion, without prior reference to the Company, to
purchase and sell investments and otherwise to manage
the Assets in such manner as TIML may determine.
(b) Any variations in the Investment Objective and
Policies, Investment Restrictions and Dividend Policy
shall be made by the Directors (as defined in the
Prospectus) and shall be notified in writing by or on
behalf of the Company to TIML.
(c) The Company may also give TIML specific prior
instructions to buy, sell or retain any investment, or
exercise (or refrain from exercising) any rights in
respect of any investment.
2.03 (a) TIML shall not be liable to the Company or its
subsidiaries in any way and the Company will not be
entitled to terminate this Agreement (otherwise than
in accordance with Clause 9) by reason of the
Investment Objectives not being achieved otherwise
than by reason of TIML not adhering to the Investment
Objective and Policies and Dividend Policy of the
Company.
(b) TIML shall in no way be responsible for any loss or
depreciation in the value of any of the Assets which
may arise by reason or in consequence of the exercise
or non-exercise of the powers, duties and discretion
hereby given or undertaken by TIML unless such loss or
depreciation shall arise by reason of the fraud or
negligence of TIML or any of TIML's officers or staff
or the officers or employees of any Associate nor
shall TIML be responsible for any loss resulting from
the acts, omissions or insolvency of any broker,
trader, market maker or other dealer or any custodian,
sub-custodian, depository, agent or nominee unless
acting in accordance with TIML's instructions.
2.04 The Company acknowledges that unless the Company gives
prior written notice to TIML in accordance with the terms
of this Agreement of any intended restriction:
(i) the Company places no restrictions on any type of
investment which TIML may include in the Assets at any
time, other than in terms of Clause 2.01;
(ii) there are no restrictions on the markets on which the
Company wishes transactions to be effected by TIML on
the Company's behalf, other than in terms of Clause
2.01; and
(iii)there is no restriction made by the Company on
the amount of any one investment or on the proportion
of the Assets which any one investment or any
particular kinds of investment may represent, other
than in terms of Clause 2.01.
2.05 The day to day management of the Assets shall be carried out
by one or more of TIML's designated staff or officers who
may be required, at the Company's expense, to attend
meetings with the Company to discuss the Investment
Objective and Policies, Investment Restrictions and Dividend
Policy of the Company.
2.06 TIML may in performing TIML's services hereunder
("services") use such broker, trader, market maker or other
dealer (in either case including any Associate) as TIML may
select and any systems of settlement or delivery appropriate
to the investment concerned.
2.07 For purposes of performing its services hereunder, TIML
shall be entitled to appoint an investment adviser to act as
its investment adviser and to provide it with investment
advice which shall include, but not be limited to, sharing
market information, assisting in the selection of
investments and providing consultation services as required
and initially TIML shall retain as investment adviser, for
an initial period of one year, Templeton Global Bond
Managers, a division of Templeton Investment Counsel, Inc.,
Broward Financial Centre, Ft. Lauderdale, Florida 33394-
3091, USA and TIML shall also be entitled to retain the
services of other sub-advisers or consultants as and when
TIML considers it appropriate to do so and initially TIML
shall retain Global Fund Management S.A., 5/1 Ulitsa Leo
Tolstoy, Moscow 119862, Russia and ICFI-Moscow Partners, 3rd
Fronzenskaya 6, Moscow 119279, Russia as sub-advisers to
provide it with services including but not limited to
furnishing advice and making recommendations regarding the
purchase and sale of securities traded in the markets in
which the Company operates, providing statistical, research
and other factual data, identifying regulatory and other
applicable governmental requirements and monitoring the
execution and settlement of transactions.
2.08 TIML will provide, on receipt of reasonable notice from the
Company, access to all books of account and records which
are within TIML's possession and control relating solely to
the Assets as the Company may reasonably require.
3. REGULATORY STATUS
3.01 TIML is a member of Investment Management Regulatory
Organisation Limited ("IMRO") and is regulated by IMRO in
carrying on TIML's investment business.
3.02 TIML shall use its best endeavours to maintain its status
as an authorised person for the purposes of the Financial
Services Act 1986.
3.03 In accepting this Agreement, the Company confirms that the
Company has the status of a Non-private Customer (as defined
in the Rules of IMRO ("IMRO Rules")) in relation to the
services which TIML shall provide. Unless the context
otherwise requires, terms defined in the IMRO Rules shall
have the same meanings in this Agreement.
3.04 The regulatory matters that IMRO require TIML to include in
this Agreement as well as other matters that apply to TIML's
appointment are set out in Schedule 2 hereto but are subject
always to Clause 2.
4. FEES AND EXPENSES
4.01 The fee ("Management Fee") which the Company shall pay as
consideration for TIML's services together with VAT (if
applicable) or any similar tax where appropriate is set out
in Schedule 1 hereto. The Management Fee shall be payable
quarterly in arrears on the Relevant Date(s) (as defined in
paragraph 4 of Schedule 2) and TIML shall submit quarterly
invoices to Templeton Global Strategic Services S.A. as the
Administrator ("the Administrator") of the Company within 14
days following the Relevant Date(s). The Company or the
Administrator shall either send or otherwise provide TIML
with a cheque in respect of the Management Fee within three
business days of submission of each quarterly invoice,
failing which TIML is authorised to draw the relevant sum
from the cash held within the Assets.
4.02 Subject to Clause 4.03, TIML will pay the costs incurred by
TIML in connection with the services out of TIML's
remuneration and the fees of any investment adviser, sub-
adviser or consultant it engages .
4.03 TIML shall not be liable to bear the following expenses,
which shall be for the Company's account:-
(a) stamp duties, taxes, governmental charges, brokerage,
commissions, penalties, transfer fees, registration
fees and other charges payable in respect of the
acquisition, holding or realisation of, or income
arising on the Assets including charges for the
transfer of Assets or delivery instructions by telex,
facsimile, cable or telephone;
(b) interest on and charges and expenses of arranging, and
arising out of, all or any borrowings made on behalf of
the Company in accordance with this Agreement;
(c) any charges or expenses of any bank, nominee or
custodian in connection with the safe custody of the
Assets;
(d) any directors' fees and expenses, it being understood
that there are no such fees payable initially;
(e) any charges in connection with the safe custody,
insurance (including premiums) of any Asset;
(f) the Company's audit fees and legal expenses incurred in
connection with its corporate existence and corporate
and financial structure of the Company and relations
with its shareholders and third parties and all other
professional fees incurred by it;
(g) costs and expenses of advertising and publicity; and
(h) any other expenses that TIML incurs in carrying out its
duties as the Directors may authorise as being payable
or reimbursable by the Company.
5. LIABILITY AND INDEMNITY
5.01 To the extent permitted by law, TIML, in TIML's capacity as
investment manager, shall not be liable for any loss
suffered by the Company unless such loss arises from TIML's
negligence, bad faith or wilful default.
5.02 The Company shall indemnify and hold TIML harmless against
all costs, claims, demands or expenses which may be brought
against or incurred or suffered by TIML by reason of TIML's
performance of TIML's duties hereunder and shall ratify and
confirm all lawful acts and things done by TIML in the
performance of TIML's duties hereunder. The indemnity shall
extend to any such claim arising as a result of loss, delay,
misdelivery or error in transmission of any communication or
as a result of acting upon any forged transfer, but not to
any claim arising from any negligence, bad faith or wilful
default by TIML.
5.03 TIML shall exercise all reasonable care and diligence in the
choice of counterparties. In the event that any
counterparty fails to account to TIML or the Custodian for
any Assets for whatever reason, TIML shall take all
reasonable steps in TIML's power to pursue, on behalf of and
at the Company's expense, all appropriate legal remedies
against such counterparty to recover such Assets or obtain
compensation. Subject thereto, TIML shall not be liable for
any such failure to account unless and to the extent that
TIML has been negligent or wilfully in default in TIML's
choice of counterparties.
5.04 TIML may in the performance of TIML's duties and in the
exercise of TIML's powers and discretions hereunder act by
responsible officer(s) and, provided it is reasonable for
TIML so to do in the circumstances, may instruct, act by, or
rely upon the opinion or advice or any information or
services provided by any broker, lawyer, valuer, accountant
or other consultant or expert whether reporting to the
Company or TIML or not and TIML shall not be responsible for
any loss occasioned because of so acting in good faith.
5.05 TIML shall not be liable for anything done or suffered by
TIML to be done in good faith in accordance with or in
pursuance of any of the Company's requests or instructions
as set out in paragraph 12 of Schedule 2 hereto.
5.06 Provided that TIML shall have used all reasonable care in
the appointment, instruction, supervision and control of any
person, firm or corporation to supply services in connection
with TIML's duties hereunder, TIML shall be entitled to rely
on any advice or information or services provided by such
person, firm or corporation (including any adviser, sub-
adviser or consultant it engages pursuant to Clause 2.07)
without liability to the Company for any loss suffered by
the Company as a result thereof provided that (a) it was
reasonable for TIML to rely on such advice, information or
services in the circumstances and (b) this sub-Clause shall
not be interpreted as permitting any delegation by TIML of
TIML's duties hereunder as the investment manager of the
Assets.
5.07 TIML shall not be required to take any legal or other action
which might make TIML liable for the payment of money or
liable in any other way, unless TIML is fully indemnified to
TIML's reasonable satisfaction for all TIML's reasonable
costs, liabilities and expenses, as a pre-requisite to
taking action.
6. ASSIGNMENT
6.01 Neither the Company nor TIML shall assign, transfer or
novate any rights or obligations under this Agreement
without the prior written consent of the other.
7. NOTICES
7.01 Unless otherwise provided, any communication or other notice
to be given by the Company or TIML shall be given in
writing, or orally and thereafter confirmed in writing.
7.02 Any such communication or other notice shall be deemed to be
given if delivered by hand or posted first class post
prepaid in the UK and air mail if outside the UK or sent by
facsimile transmission by the party giving notice to the
address of the other party as set out above or to such other
address as may from time to time be notified in writing to
it by the other party. Such communication or other notice
so posted shall be deemed to have been duly received
48 hours (if posted and received within the UK) and 120
hours (if posted and/or received outside the UK using
airmail) after it is posted and any such communication or
notice delivered or given by facsimile transmission shall be
deemed given upon delivery or transmission and in proving
service it shall be sufficient to prove that the envelope
containing the communication on other notice was properly
addressed and posted or, as the case may be, that it was
delivered to the correct address, or that it was sent by
facsimile transmission to the correct number.
8. JURISDICTION
8.01 This Agreement shall be subject to and construed in
accordance with the law of England. Disputes shall be
subject to the jurisdiction of the English Courts to which
the Company and TIML submit.
9. TERMINATION
9.01 (a) The Company shall not terminate TIML's appointment
during the life of the Company except where the Company
resolves to do so at a general meeting of the Company
by a shareholder resolution with a majority consisting
of 75% or more of the total number of votes cast for
and against such resolution .
(b) TIML shall be entitled to terminate its appointment by
giving the Company not less than 90 days notice in
writing so as to expire at any time after the first
anniversary of the Commencement Date, but only in
circumstances where TIML has selected another
investment manager for the Company who is acceptable to
the Directors and who has agreed to enter into an
investment management agreement with the Company to
take over the responsibilities as the investment
managers of the Company.
9.02 Either the Company or TIML may terminate this Agreement
immediately without penalty by notice in writing to the
other if:-
(a) an order is made or an effective order is made or
resolution is passed for the winding-up of the other
party otherwise than for the purpose of its
amalgamation or reconstruction on terms approved in
advance in writing by the first party which approval
shall not be unreasonably withheld or delayed; or
(b) the other party shall become or be declared insolvent;
or
(c) a receiver of the other party or any of its assets is
appointed; or
(d) the other party commits a material breach of the
Agreement.
9.03 This Agreement shall terminate immediately if TIML fails to
maintain TIML's status as an authorised person for the
purposes of the Financial Services Act 1986 (as amended) in
relation to this Agreement PROVIDED THAT in the event of
TIML temporarily ceasing to maintain its status as such an
authorised person in circumstances previously approved in
writing by the Company shall not result in the termination
of this Agreement.
9.04 Termination shall not affect any action taken by TIML and
permitted under this Agreement, prior to the date of
termination or any warranty or indemnity given by the
Company under this Agreement or implied by law and shall be
without prejudice to any other rights, obligations or
remedies of either the Company or TIML in respect of any
matters arising under this Agreement prior to such
termination. Termination will be without prejudice to the
completion of transactions already initiated which will be
completed by TIML as soon as practicable.
9.05 On termination by either the Company or TIML, TIML shall be
entitled to receive from the Company all fees, costs,
charges and expenses arising under this Agreement up to the
date of termination including any additional expenses
necessarily incurred in settling outstanding obligations or
terminating this Agreement whether they occur before or
after the date of termination.
9.06 If the Company wishes to give less notice than provided for
in Clause 9.01, it is agreed that, in consideration of
TIML's accepting a lesser period of notice, the Company
shall pay to TIML on the expiry of such agreed shorter
period of notice any remuneration remaining due and unpaid
in respect of TIML's services and an amount (together with
Value Added Tax) equal to the remuneration which would have
been payable to TIML in respect of the period by which the
agreed shorter period of notice is less than the full
period of notice, based on the Net Asset Value of the
Company pursuant to the provisions of paragraph 2 of
Schedule 1 hereto.
9.07 Upon termination hereof by either party and for whatever
reason the Company hereby agrees if requested to do so by
TIML to commence the procedures necessary to change its
name to a name unconnected with TIML or any Associate as at
the date hereof and to use its best endeavours to obtain
the consent of its shareholders to the change of name if
necessary.
10. CONFIDENTIALITY
10.01 Neither the Company or TIML shall disclose to any
person (except with the Company's authority or unless
required by law or any regulatory authority) any
information relating to the business, assets or finances or
other matters of a confidential nature of the other party
which it may have in its possession during the period of
this Agreement.
IN WITNESS WHEREOF this Agreement typewritten on this and
the nine preceding pages together with the two Schedules
annexed on pages 11 to 18 has been entered into the day and
year first above written:
Signed for and on behalf of
the said TEMPLETON RUSSIAN
AND EASTERN EUROPEAN DEBT FUND
by:
/s/ Charles E. Johnson ..... Director
Charles E. Johnson.......... Full Name
/s/ J. Mark Mobius...........Director/Secretary
J. B. Mark Mobius.............. Full Name
Signed for and on behalf of
the said TEMPLETON INVESTMENT
MANAGEMENT LIMITED by:
/s/ D. W. Adams ........... Director
Douglas William Adams....... Full Name
/s/ Gerard W. Kerr...........Director/Secretary
Gerard William Kerr......... Full Name
SCHEDULE 1
referred to in Clause 4 of the foregoing Investment Management
Agreement
Management Fee
1. The Management Fee payable to TIML under this Agreement
shall be in respect of successive annual periods (or parts
of such periods) beginning on the Commencement Date.
2. The Management Fee shall be payable at the rate of 1.85 per
cent per annum of the Net Asset Value of the Company (as
defined in the Prospectus and determined in accordance with
the valuation principles referred to in paragraph 4(d) of
Schedule 2) and shall be payable quarterly in arrears at
the Relevant Date(s) (together with any applicable Value
Added Tax) on the basis of the average of the Net Asset
Value of the Company on each weekly Valuation Date (as
defined in the Prospectus) in the period from the last
Relevant Date down to the Relevant Date concerned except in
connection with the first period where the average will be
calculated from the Commencement Date and the last period
where the average will be calculated down to the date of
termination.
3. TIML shall compute the amount of the Management Fee based
on information supplied by the Administrator and shall
submit invoices to the Company for payment in accordance
with Clause 4.01 of the Agreement.
4. If for any reason the period for which a payment is due is
less or more than a complete quarter, the part of the
remuneration attributable to the number of whole weeks in
such quarter shall be based on the average of the Net Asset
Value of the Company on each weekly Valuation Date during
such number of whole weeks and for any remaining period of
less than one week shall be 1/7th part of the aggregate of
the Management Fee payable for such week .
5. The value of any holdings in investment trusts, unit
trusts, funds and similar schemes, both closed and open-
ended, which are managed by TIML or any Associate of TIML
shall be excluded from the value of the Assets for the
purpose of calculating the Management Fee.
SCHEDULE 2
referred to in Clause 3.04 of the foregoing Investment
Management Agreement
1. Contingent Liability Transactions
(a) The services to be provided by TIML shall include
effecting, without prior reference to the Company,
Contingent Liability Transactions (being transactions
relating to Futures, Options and Contracts for
Differences (within the meaning of Schedule 1 to the
Financial Services Act 1986) or to any right or
interest in such an investment) and transactions in
units in Unregulated Collective Investment Schemes.
Margins and payments for Contingent Liability
Transactions may be made in the form of cash or other
investments of the Company provided that TIML may not
commit the Company to any obligation which would at
the time of commitment be in breach of any limits or
restrictions set out in the Prospectus or in the
Articles of Incorporation of the Company or imposed by
Luxembourg law. TIML will have discretion as to the
circumstances in which TIML may, without reference to
the Company, make contractual or other arrangements to
settle or close out obligations entered into in
accordance with this paragraph.
(b) TIML may effect Contingent Liability Transactions with
or for the Company otherwise than under the rules of a
Recognised or Designated Investment Exchange and in a
contract traded thereon if TIML is permitted to do so
under Rule 3.13(1) of Chapter II of the IMRO Rules.
2. Complaints
(a) TIML has in operation a written procedure in
accordance with the Rules of IMRO for the effective
consideration and proper handling of complaints from
customers.
(b) Any complaint by the Company arising from the services
performed by TIML hereunder should be notified in
writing to TIML's Compliance Officer who will
investigate it and give his response. Once a
complaint has been responded to in writing, if no
indication has been received from the Company that the
Company are not satisfied with the response, then
after four weeks from the date of response TIML may
treat the complaint as settled and resolved. The
Company shall at all times have the right to complain
directly to the Investment Ombudsman and shall inform
TIML of the terms of any complaint the Company make
direct to the Investment Ombudsman at the time such
complaint is made. The foregoing shall be without
prejudice to the provisions of the said Agreement.
(c) The Company may request, and TIML shall provide as
soon as reasonably practicable thereafter, a statement
describing the Company's rights to compensation in the
event of TIML's inability to meet any liabilities to
the Company.
3. Soft Commission Arrangements
TIML does not intend to effect transactions with or through
the agency of another person with whom TIML has an
arrangement under which that other person will from time to
time provide or procure for TIML or an Associate services
or other benefits, the nature of which are such that their
provision results, or is designed to result, in the
improvement of TIML's or such Associate's performance in
providing services for its clients or customers and for
which TIML or such Associate make no direct payment but
instead undertakes to place business (including business on
behalf of TIML's or such Associate's customers, including
the Company) with that person.
4. Periodic Statements
(a) TIML shall arrange for the Administrator to send to
the Company written periodic statements of the
composition and value of the Assets within five
business days of the dates specified below (the
"Relevant Dates" and individually a "Relevant Date")
as follows:
(i) quarterly statements as at 31 March, 30 June, 30
September and 31 December in each year;
(ii) an annual statement as at 31 March in each year;
and
(iii) a final statement on the date of termination
of this Agreement.
TIML shall also arrange for the Administrator to send
to the Company further such periodic statements on a
weekly basis
(b) For the avoidance of doubt the parties hereto agree
that the relevant provisions of the IMRO Rules as to
the content of periodic statements shall not apply.
(c) The valuations referred to in the foregoing paragraphs
shall (unless otherwise agreed with the Company) be
determined by the Administrator in conjunction with
TIML in accordance with the valuation principles to be
applied in determining the Net Asset Value of the
Company as described under the heading of "Valuation
of Net Assets" in Part VI of the Prospectus, as from
time to time amended.
(d) TIML or the Administrator on behalf of TIML shall
submit the contract notes and other details of
transactions in respect of the Assets to the Company
not later than the end of each calendar month or as
soon as reasonably practicable thereafter.
(e) TIML should provide the Company with such other
periodic reports as may be agreed upon from time to
time.
5. Stabilisation
The Company agrees that TIML has the right to effect
transactions in accordance with Rule 3.2(2) of Chapter II
of the IMRO Rules in investments the prices of which may be
subject to stabilisation.
6. Borrowings
Subject to the restrictions on borrowings set out in the
Prospectus and the Articles of Incorporation of the
Company, TIML may commit the Company and its subsidiaries
to supplement the Assets either by borrowing on the
Company's behalf in connection with repurchases of shares
of the Company or tender offers or to pay dividends or
distributions required for tax purposes or for other
temporary purposes that are for facilitating timely
settlement of investment and foreign exchange transactions,
whether or not on the security of documents of title or
documents which evidence title to the Assets, or otherwise
that commit the Company to a contract the performance of
which may not be possible without such a supplement when
TIML consider such supplement to be appropriate for the
purpose of carrying out the Investment Objectives in
respect of the Assets.
7. Underwriting
(a) TIML shall be entitled to commit the Company to any
obligation to underwrite or sub-underwrite any issue or
offer for sale of securities without any restriction on the
categories of securities which may be so underwritten or
any financial limits on the extent of such underwriting,
except as otherwise stated in the Agreement.
(b) TIML may without prior reference to the Company acquire or
dispose of investments for the account of the Assets of
which an issue or offer for sale was underwritten, managed
or arranged by TIML or an Associate thereof during the
preceding twelve months.
8. Custodian
(a) TIML is not authorised either to accept delivery of
cash or securities of the Company or its subsidiaries
or to establish or maintain custodial arrangements for
the Assets.
(b) In particular, the Company shall direct the Custodian
to segregate the Assets and to invest, realise and
reinvest them in accordance with the directions given
by TIML. Such directions shall be transmitted in a
manner to be agreed between the Custodian and TIML.
(c) Subject to paragraph (d) below, investments comprised
in the Assets shall be registered in the Company's
name or in the name of a subsidiary of the Company or
the name of the Custodian or in the name of a nominee
company which is a subsidiary of the Custodian or in
such other manner as may be agreed to by the Company
from time to time.
(d) Investments comprised in the Assets which are issued
under the laws of any country or state outside the
United Kingdom shall be registered either in the
Company's name or in the name of a subsidiary of the
Company or the name of the Custodian or of a
subsidiary of the Custodian or in the name of such
other bank, trustee company or nominee company as may
be agreed from time to time by the Company, and the
bank or company concerned shall be entitled to charge
the Company at its normal rates for the provision of
such nominee services.
(e) The provisions of paragraphs (c) and (d) above shall
apply to investments in bearer form and to documents
of title to investments as though references to the
deposit of such investments or documents of title with
any such company as may be specified in those
paragraphs were in each case substituted for
references in the said paragraphs to the registration
of investments in the name of such company.
(f) Except with the Company's prior consent in writing, no
investment, money or other assets comprised in the
Assets nor any document of title thereto shall be lent
to or deposited with any person (whether by way of
security or otherwise) other than a subsidiary of the
Company or as provided
(i) in the preceding provisions of this paragraph 8;
or
(ii) in the case of money, paragraph 10 below.
(g) TIML does not accept liability for any act, default or
omission on the part of the Custodian or any
subsidiary of it or agent thereof or any other bank,
trustee company, depositories, nominee company or
other person in whose name or with whom any investment
or documents of title may at any time be registered or
deposited.
(h) Subject to the foregoing provisions of this paragraph,
TIML will be entitled to instruct the Custodian or
such other bank, trustee company, nominee company or
other person in whose name or with whom any
investments or documents of title have been registered
or deposited to make delivery of such documents of
title when settling transactions.
(i) TIML will take all reasonable steps to reclaim or, as
appropriate, to assist the Custodian to reclaim all
refunds which shall be due of tax paid by way of
deduction from dividends and interest or otherwise in
respect of the Assets.
9. Voting and Other Rights Of Investments
(a) TIML shall be entitled at TIML's discretion and
without prior reference to the Company to exercise or
refrain from:-
(i) exercising (or leave unexercised) voting and
other rights, privileges and options attaching to
or in any way arising in connection with any of
the investments comprised in the Assets;
(ii) making payment in respect thereof, charging or
deducting the amounts paid to the Company or its
subsidiaries;
(iii) consenting to, or participating in,
liquidations, reorganisations, amalgamations,
mergers and sales, affecting any of the
investments in the Assets; and
(iv) in such connection paying assessments,
subscriptions and other sums, and charge the
amounts paid or payable to the Company or its
subsidiaries.
Provided that the Company reserves the right at the
Company's discretion to direct TIML how to exercise
any such rights in relation to any particular
investment and TIML hereby undertakes to comply with
any such direction.
(b) For the purposes of paragraph (a), voting rights shall
be deemed to include not only the right to vote at a
meeting but any consent to or approval of any
arrangement, scheme or resolution or any exercise of,
alteration in or abandonment of any rights attaching
to any investment comprised in the Assets and the
right to requisition or join in a requisition to
convene any meeting to give notice of any resolution
or to consent to any short notice of a meeting or to
demand or join in demanding any poll at a meeting.
10. Bank Accounts
Any money which is at any time comprised in the Assets
shall be placed to the credit of one or more bank accounts,
which may be with a branch in the United Kingdom or
overseas. Money so deposited shall be held in the
Company's name and accordingly shall not be client money
for the purposes of the Financial Services (Clients' Money)
Regulations 1991 (as such Regulations may be amended or re-
enacted). The Company shall grant mandates in TIML's
favour with regard to the operation of such accounts so as
to permit TIML to perform TIML's duties under the
Agreement.
11. Material Interests And Conflicts Of Interest
(a) TIML may effect, without prior reference to the
Company, transactions with or for the Company in which
TIML has directly or indirectly a material interest
(other than an interest arising solely from TIML's
participation in the transaction) or a relationship of
any description with another party which may involve a
conflict with TIML's duty to the Company, except that
TIML shall not invest any part of the Assets in any
investment trust company or Collective Investment
Scheme managed by TIML or any Associate of TIML
without prior notification to the Company. For the
avoidance of doubt, in providing its services to the
Company, TIML may use any broker, trader, market maker
or other dealer from whom TIML receives advice or
other services in accordance with Clause 2.07 of the
Agreement.
(b) TIML or any Associate may without prior reference
(other than in respect of any transaction within the
exception stipulated in paragraph (a) hereof) to the
Company:-
(i) sell an investment to, or buy an investment from,
the Company for the account of the Assets as a
principal or as an agent (including as agent for
an Associate) or on behalf of another of TIML's
clients; and
(ii) have directly or indirectly a material interest
of any description, or have a relationship with
another person such as to place TIML or it in a
position where TIML's or its duty to or interest
in relation to that other person conflicts or may
conflict with TIML's or its duty to the Company;
or
(iii) act both as an agent for the Company and
also as an agent for the counterparty,
(iv) enter into a transaction jointly on the Company's
behalf and on behalf of other person(s) for whom
TIML act as investment manager.
The terms of any such transaction shall be determined
by TIML or the Associate, or, as the case may be,
agreed with the other principal concerned taking into
account the normal profits of any third party in
respect of such a transaction provided that TIML or
the Associate reasonably believes that the terms of
the transaction is no less favourable to the Company
than it would have been had it been a transaction at
arm's length with a third party which is not an
Associate in the open market.
(c) Notwithstanding Clause 6.01 of the Agreement TIML may,
in TIML's absolute discretion, without prior reference
to the Company, instruct as TIML's agent any Associate
to arrange any transaction in connection with the
management of the Assets.
(d) Subject to the other provisions of the Agreement, TIML
may acquire or dispose of units for the account of the
Assets in any Collective Investment Scheme operated or
advised by TIML or any Associate thereof or investment
company which is, or the custodian, trustee or manager
of which, is, an Associate.
(e) Any transaction in investments in Collective
Investment Schemes will be effected at the relevant
price quoted by the operator of the scheme (subject to
TIML's duty of best execution if more than one price
is quoted).
(f) Subject as provided in paragraph (a) above, any
Associate of TIML may retain any commission, the
benefit of any mark-up or mark-down or any other sum
derived from any transaction carried out for the
Company in any Collective Investment Scheme managed by
an Associate in accordance with this paragraph and
neither TIML nor any Associate shall be liable to
account to the Company for any profit, commission,
brokerage or other remuneration made or received from
or by reason of any transaction or any connected
transaction in relation to the Assets whether from any
other client of TIML's or an Associate or otherwise,
and accordingly the Management Fee set out in Schedule
1 shall neither be supplemented nor abated by reason
of any such commission, profit, brokerage or other
remuneration.
(g) Neither TIML nor any Associate shall be required to
disclose to the Company details of any amounts TIML or
they receive from transactions effected under this
Agreement (other than amounts expressly charged to the
Company) nor details of any connected transaction nor
of any other customer or counterparty involved in a
transaction.
(h) Nothing in this Agreement shall be deemed to limit or
restrict TIML's right, or the right of any of its
officers, directors or employees, to engage in any
other business or to devote time and attention to the
management or other aspects of any business, or to
render investment management services or services of
any kind to any other client.
(i) The Company acknowledges that TIML provides investment
management services to numerous other private
accounts. The Company also acknowledges that TIML may
give advice and take action with respect to any of
TIML's other clients or for TIML's own account which
may differ from the timing or nature of action taken
by TIML with respect to the Assets.
(j) Nothing herein contained shall prevent TIML, TIML's
directors or employees or any Associate of TIML from
buying, holding and dealing in any investments upon
their own account, notwithstanding that the same or
similar investments may be held for the account of the
Assets and no such person shall be liable to account
for any benefit to the Company by reason of such
interest.
(k) Nothing in this Agreement shall impose upon TIML any
obligation to purchase or sell or to recommend for
purchase or sale, with respect to the Assets, any
security which TIML, or TIML's shareholders,
directors, officers, employees or Associates may
purchase or sell for its or their own account(s) or
for the account of any other client.
12. Authorised Signatories and Instructions
(a) The Company shall, at TIML's request, provide TIML
with:
(i) any authority necessary to enable TIML to fulfil
TIML's obligations under this Agreement; and
(ii) a list and description of authorised persons from
whom TIML may accept instructions, together with
specimen signatures of such persons.
(b) The Company may give TIML instructions from time to
time by way of a letter (receipt of which instructions
TIML shall acknowledge in writing).
(c) TIML are authorised to rely on, may act on and treat
as fully authorised by the Company, any instruction,
confirmation or communication which purports to have
been given (and which is accepted by TIML in good
faith as having been given) by or on behalf of the
persons notified by the Company from time to time to
TIML as being authorised to instruct the Company by
whatever means transmitted and whether or not in
writing and notwithstanding that it shall subsequently
be shown that the same was not given, signed or sent
by an authorised person and, unless TIML shall have
received written notice to the contrary, whether or
not the authority of such person shall have been
terminated.
(d) TIML may, if TIML so wishes, request instructions from
the Company in regard to any particular transaction
which it proposes to effect or generally and may
refrain from effecting such proposed transaction or
any transaction until TIML shall have received
instructions, in writing if so requested.
/s/ Charles E. Johnson /s/ J. Mark Mobius
______________________ __________________
Charles E. Johnson J. Mark Mobius
/s/ D. W. Adams /s/ Gerard W. Kerr
_______________ __________________
D. W. Adams Gerard W. Kerr